tv Taking Stock With Pimm Fox Bloomberg June 18, 2014 9:00pm-10:01pm EDT
>> this is "taking stock" for wednesday, june 18, 2014. i'm pimm fox. today's theme is revelations. general motors revelations brought mario mara -- mary barra back to capitol hill today. plus, amazon.com chief executive jeff bezos revealed the company's fire phone. we will talk about the companies jumped into the smartphone market. will it make money echo we will find out. -- will it make money?
we will find out. and laird hamilton's new venture, the golf board. he is hoping it will bring cool back to the game of golf and maybe bring money to his pocket. all that and more over the next hour. first, to washington dc, first involving the federal reserve, then general motors, and the washington redskins. at a news conference today, i fed chair janet yellen said growth is bouncing back and the job market is improving. she also addressed concerns about inflation. >> inflation continues to run well below our objective. we are still some ways away from maximum employment. and for the moment, i don't see any tree off whatsoever from achieving our objectives. >> the stock and bond markets liked with a heard from janet yellen. after speaking at the press
conference, the s&p 500 hit a new record, up more than 14 points. i am joined by bloomberg economist josh wright. he is a former policy advisor and market analyst at the fed. and we're joined by the chief economist at banc of tokyo. josh, i want to start off with you. based on the comments we heard from janet yellen, does everyone take away that the economy is getting better almost all on its own? >> i think a lot of people think the economy is doing better and the fed is there to help it get at her. i think that is part of what we saw today in the market reaction as janet yellen said, i don't see a trade-off. we still have a free hand for disruptive policies. >> does the economy remain in such a weakened state that the federal reserve needs to continue to play this role? >> that is an interesting question. actually, i don't think there is
a lot of slack. i think the arguments for slack in the economy this far into the recession five years, i think it is dwindling by the day. i was shocked at the market reaction. the dot forecast went up. but tell me what that is. each member is assigneda dot? >> yes, each member can vote where they think it will be. it is kind of like pin the tail on the donkey. you can look at the forecast like fed chairman bernanke told us to. and the median is moving up. the median moving up from december is dramatic, but the market did very little on that at all. >> kevin caron, how about the fed meeting minutes the stock market got nothing to chart away
from what the perception was that the fed would do. i agree with chris. when i look at the data, there was some question about the inflation rate that it may be going up in the next few months. perhaps they might have to tighten that somewhat. bernanke said that we needed to watch the inflation rate. they are important. and now to chris's point, the forecasts are pointing to the fed needing to tighten. but this is a more difficult situation. not only are they suggesting that the -- that they may need to tighten at some point, the ecb is moving in the other direction. a lot of crosscurrents in monetary policy. but that is an interesting idea about the idea of crosscurrents. when you look at it, the dispersion of the dot is spread out a little bit more,
suggesting that there might be some disagreement amongst policymakers about when to raise, how to hide to raise -- how high to raise. there may be some this agreement about exactly what to look out upon. not just the expectations for policy, but the excitations for conditions. that is the entire menu should expect to see as we move closer and closer to that liftoff date. >> -- that is the difference you should expect as we seem to move closer and closer to that liftoff date. >> what about employment? >> there is still some slack there, but they still have the green light. it is true they do not believe the economy needs as much support as it used to have, but they have already baked into those expectations for reducing the help to the economy they are providing. >> are there any demographic issues at work in the labor market that should change the
fed's policy toward a specific level of unemployment? >> there could be, but some of the participation rates for those, basically 25-50 five, that participation rate came down as well. i think we are missing the point. only three out of 16 members do not see a fed's run -- fed fund rate at the end of 2016 of three percent. if it's going to be 2.5%, then they've got to move the end of this year. there is a huge disconnect in the market right now. >> do you agree with what chris says, that we get something by the end of this year in december? is the stock market prepared for this cap a >> no, i think the market is looking for something in the middle part of 2015. the other part of it is the fed has been overestimating growth. a year ago at this time, there was the expectation that the u.s. economy would be growing something like 3.5%.
today, they have come around to the notion that, well, we slipped on that target once again and it will be something much lower. there is, perhaps some anticipation that the interest rates will not be going up as quickly as maybe chris is thinking. and the ultimate growth rate in the economy ends up eating a little bit slower. therefore, the forecasters are straightening it a little bit lower, too. >> gentlemen, thank you very much. kevin caron and chris rupkey . the move on to the next story. the story around the washington rest -- redskins. the u.s. patent office denied their patent renewal saying that the name is disparaging to native americans. what does this move by the u.s. patent and trademark office mean for the nfl?
>> maybe not as much as we all thought. trademarks exist outside of registration. they exist the for registration and can exist without registration. you can have an unregistered trademark and still go and sue someone for infringing on the trademark. then you show that you do not maybe have registration, but you have been using it for commerce, and therefore it is yours. the redskins are not necessarily facing the possibility of having no right to use the term "redskins" or their current logo, but they are facing a legal authority in the u.s. saying this is a disparaging term that you are using and we don't want to recognize it. that increases the pressure on them to change the name. >> does this have any affect on the road fees that would be collected by either the nfl team owners on behalf of merchandise that is sold that bears the redskins logo?
>> if the redskins continue to use the name, and if the sales continue at a similar rate, then they could -- and they split that third one ways. everyone but the dallas cowboys shares in the merchandise from the nfl. then they will be able to go after trademark infringers. does this mean that people will want to buy gear that has a racial slur on it, according to the appeals court at the patent trade-off is? maybe, -- the patent trade office? maybe, but there has been this changing tide from any -- from many. able are already disinclined to buy it. it certainly adds to the voices saying that this is not a name nfl -- any nfl team should be using. >> they are part of this trademark decision, since they are one out of 31 teams.
>> i would think they would want to look at how this reflects on the nfl. you are 1/32nd of the brand of the nfl. from that perspective, you might hear from dan snyder or the other owners. but it does not change the legal claim to the name. it just means that if you were to look up in the registration database if this ruling is upheld, which we should note that appeals have been successful for the redskins in the past on this exact issue. even if they were to lose those appeals at this time, it just means that you would not find their trademark when you look in the registration database. it would not mean that there trademark and their right to use
>> this is "taking stock" on bloomberg. i'm pimm fox. mary barra testified before a congressional panel today. they took note of whistleblowers first reported in bloomberg is this week. >> there is a story today in bloomberg businessweek about a whistleblower who apparently tried to bring these problems to the attention of the company and lost his job as a result.
>> the previously referenced article by bloomberg notes that cortland kelly, who worked on the cavalier had to continue doing that even with threatening whistleblower references. >> tim higgins of bloomberg news cho the article. he joins us now from washington, d.c. give us a little background on the story. it has to do with whistleblowers, but also with a culture at g.m. >> antone to lucas -- anton the lucas looked into why it took so long to recall the cobalt, more than a decade. he said that the culture was one of a slow moving -- and it really did not address issues in an expedited fashion.
a lone engineer, according to him, was able to approve a part that did not meet specifications, and then later fix it improperly, and change the part number, essentially hiding the fix. and that hid the problem down the road for other engineers trying to address it. during that timeframe, what were other people experiencing? that is the question. cortland kelly, a guy working the bowels of the company on safety issues. he was responsible for safety issues for the cavalier. he pointed out issues and felt like he was running into issues for things he said properly address them. >> hang on just a second. joining us is the ranking member of the house panel that mary barra testified before today.
congresswoman, thank you for joining us. i wonder if you could give us your reaction to mary barra's testimony. >> like many people, i'm concerned about the corporate culture at g.m., where you have a culture of people who tried to sweep everything under the rug. there was talk of this g.m. nod, where people not when something comes up, or they shrug and say, not my problem. that is what we see with these engineers. they have customer complaints and complaints from g.m. employees coming in over the ignition switches switching to neutral while people are driving along, but they do not ring it to -- bring it to anyone's attention. they call it a customer convenience issue when it shuts off at 65 miles per hour. >> is there anything you would like to see g.m. as a company address that they are not addressing? >> this is what i told mary
barra today, that they not only need to change the structure at g.m., but the culture. i have people i'm very close to inside of g.m. who are saying that what is happening now because of what g.m. has been, by targeting lower-level employees, by denying responsibility at the highest levels, that there is a culture of almost paranoia happening over there now. and it is going to be even worse. people do not want to come forward because they are afraid they will lose their jobs, too. >> does this mean that the rules surrounding whistleblower status can be changed? >> we can certainly look at the rules surrounding whistleblower status. the other thing to look at is
the power of the national highway transportation agency. do they have enough power to review these, as well as to levy fines? we had people in the media raising these issues in 2004 and 2005 as g.m. continue to say this was not a safety problem, but a consumer satisfaction problem. which of course, led to g.m. saying, well, what is the cost-benefit analysis of changing this part versus what is a safety risk to people driving when their engines stop? >> congressman, what would you like to see happen not only at g.m., but inside the u.s. government? where were regulators? >> when he to happen at g.m., i already said. but also, nhta, they were heavily underfunded. they were understaffed. do they have enough to do an investigation after i told the chairman that i thought they
should have more hearings about this. g.m. was clearly sweeping things under the rug. the question is, can more power to nhtsa really solve the problem you thank you very much. coming up. coming up, we will talk about paying as you go. senti in jet, we will meet the president. and find out how it all works next. ♪
i'm pimm fox. demand for travel has pushed them to their record in several years. with more on demand and prices for chartered air travel, we are joined by andrew collins, the ceo and president of cancro -- of sentient jet. you offer a tiered approach to jet travel. >> correct. we invented the jet card. essentially, purchasing a fraction of a jet, what we do is sell prepackaged time on a light aircraft, midsized aircraft, or super mid aircraft, large cabin. essentially, it is a debit card. you prepurchase the time and as you fly, we can do you a jet with 10 hours advance notice anywhere in the united states
and after you have flown, we debit it off the jet card. >> can you give us an example of how much the different segments would cost to do a traditional run? for example, i know you have a lot of popular destinations. maybe start off with number one, which i know is aspen. >> sure, aspen. it is big in the winter, but the most popular month in the year is the summer, july. it is a popular destination. coming from the east coast on a midsize, or super mid so you can go nonstop, somewhere between $28,000 up to $37,000. >> what about the west coast? >> similar. but what do you see the demand for, midrange to jets? >> like to midrange jets. light are really good utility vehicles. corporate rates are up 10%, as his leisure. at the end of the day, people are looking at that light or
mid, and even the super mid. a large cabin is for international travel. >> let's talk about some of the destinations. obviously, it is seasonal, as you mentioned. nantucket is a big market for you right now. >> nantucket is big. almost one quarter of our cardholder base, 4000 jet card holders, many of them have homes in nantucket. it is about a $5,000 trip on a light or maybe $7,000 on a man. >> have you seen -- on a mid. >> have you seen gas saving features? >> we are releasing our -- seeing a resurgence in private jet demand. that is bringing newer aircraft into the charter market. it stalled out for a bit because of the financial crisis.
>> this is "taking stock goes quote on bloomberg. i'm pimm fox. some headlines from argentina. it is hard to stave off the debt crisis. joining you in now with more details -- joining me now with more details if koch yeah --katya. what happened in the supreme court? >> they lost their bid. >> argentina lost with the >> yes, this was on monday. this means the supreme court will not listen to their appeal and they will have to pay defaulted bonds in full.
when they made payments on their restructured debt. this happened on monday. >> you say when they make payments on their restructured debt. is there already a plan for them to do so? >> they make payments on their restructured debt. those are the bonds that they swapped in 2005-10. they have a payment on those june 30. >> why hasn't the government of argentina tried to go to the supreme court to do this? is it just a question that they do not want to pay the money? >> pretty much. they have lost a lot of rulings in court. basically, this one is the most damaging, because with this loss may have to default again if they do not pay. that is a sticky situation. >> is there any plan on the part of argentina to pay this all off? there will be some negotiations with bondholders.
they have been patient so far, obviously. will they begin to play hardball? >> we don't know. this is the first time their lawyers said they would sit down. we don't know what that means. we don't know if they will pay in bonds or in what way. accepting the fact that argentina was in default, accepting the fact that argentina was not going to pay, this is a big turnaround. >> and this makes the bonds more valuable. >> very much so. >> thanks very much. let's move from argentina to the united states west coast. in seattle today, amazon.com unveiling its fire phone. cory johnson attended the event.
he joins me now. will this be the smartphone that changes the landscape against apple as well as samsung? >> it is an interesting phone with some really distinguishable features. among them, 3-d like this latest technology -- display technology that looks at how you see the phone and adjust the image for that, allowing it to pull a hologram-like effect. very interesting. also very interesting, and maybe more important, their firefly app, which allows you to scan stuff, whether it is a song you're playing, a tv show you're watching, or seeing something on the shelf and finding a place to buy that on amazon. that could drive a lot of business to amazon. it is an interesting phone. and it is competitive in the market at $200. kind of at the right price point.
it is very much different from other phones on the market right now. it is kind of cool. >> did they say anything about the streaming video, streaming music from the amazon prime services? >> they talked quite a bit about that. when they announced prime music last week, that was to make sure he did not take the thunder away from their phone announcement today. they see the phone as a way people consume music. they want people to consume amazon music. they want to be offering the digital content, whether it is digital videos or amazon prime music. of course, selling cds, that was a giant business for amazon. as that business increasingly moved to mitch -- to digital, amazon has not been able to keep that under its roof. amazon is hoping that the phone will not only make some money in that business, but also makes him more money in the digital content business.
>> thank you very much. shares of amazon.com higher today by about 2.5%. one story about fire, the fire phone, to a story about introducing a spark of interest in golf playing. one solution is perhaps, golf boards. what are they? they are designed to him and made the sedentary activity of sitting in your golf cart, and it is excited -- and it is designed to add excitement, just like riding a skateboard. joining me now is surfing legend and golf or design consultant, laird hamilton. describe what this golf board is designed to do. >> it is virtually an electric skateboard, which normally when you are, you would get arrested if you rode these on the course. it is an all-wheel drive toward that you play golf on dashboard -- board that you play golf on.
it is also drawing the attention of a lot of younger people because it is fun. >> tell us a little bit about some of your partners in this business. >> i have a few different people involved. one of the original founders, mr. wildman, was involved with me in the conception of it. >> this is dan wildman, right, of bali -- bally total fitness. >> yes, don wildman, yes. he and i came up with the idea of skateboards. then we evolved it with two gentlemen from oregon, who had the board that we needed to play golf with. we played -- created a partnership with them and have been working on the board now for close to probably 18 months.
>> tell us about the actual design. how long does it run? what kind of charge does it need? bags we use a similar battery configuration as tesla. it will -- >> we used a similar battery configuration as tesla. it will hold at least for the game, unless you are a young person and running around rather than playing the game. then it might run out sooner. then we have a turnaround time where we can recharge the boards within an hour in some cases. >> have you gotten any response from various golf course officials are allowing this vehicle, this golf board on the 18 holes? >> week that we were going to run into a lot of resistance at first. and we've only had incredible reception.
we had won innovative product of the year at the pga show in florida. to date, we have most of our sales in the golf industry with golf courses. that is the amazing part, the reception that we have had from the industry. >> currently, you have what, three models? can you give us an idea of the pricing? >> the boards run between $3200 to $3500. at this point, the highest and one -- the highest end one has a remote control and you have your power on the handle. we are designing the boards to accommodate golfing and golf courses. there are a lot of safety features to them. they are designed to hold golf
clubs stop -- golf loves, and some of the other important things for golfing. you can take a handlebar off and ride it with your golf clubs on your back. it depends on how you want to ride it and your style of playing with the board itself. >> maybe ideas for a surfboard that comes with a coupled or? -- cupholder? you have a variety of businesses based on your champion surf boarding. tell us about what you are doing. even apparel and nutrition. >> the biggest thing in the last few years is stand up paddling. i was instrumental in bringing this discipline of surfing around. it is a sport that everyone can participate in. and i have a nutritional company called truition, which is a high-end nutrition company that makes top-level protein.
i'm involved in and apparel project right now, and a couple of other projects we are working on. i'm going into the entrepreneurial aspect of my career at this point, and always looking to try to ride your waves. >> very good, trying to ride bigger ways indeed. are you also planning to improve your golf game? what is your golf game like? >> i can actually play the game. i would not say that i'm any good. but there are very few people that are. that is probably why it is dwindling in popularity at this point. but i know how to hit the ball. and i'm definitely a lot more interested in being on the course now that there is a board involved. it makes me feel more at home and i feel a little less frustrated and i feel like i can actually play a better game.
that is one of the interesting things about the board, that it really allows good players to even play better, and it draws the interest of a lot of younger players. it speaks to a broad demographic. that is why we believe it is going to take off and change golfing. >> but you cannot hit the ball while you are writing the board, write? --right? >> that is a different discipline, polo golf. that is our style of play. we don't take it to seriously. but maybe you will start a new trend. coming up, a tiny work of modern art. details ahead. ♪
through a major renovation. i'm joined now by louise hartman, founding partner of suspect hartman architects. let's talk about this assignment. four hundred 25 square feet sounds awful small. >> really small, and what made it even trickier is on the top of a sixth floor walk up in the west 70. it had three or four different chunks of space that the owner had been renting out two college kids for years. i don't know if you saw the before and after, but it is a great transformational story. just by thinking about what it takes to live efficiently in a small space were able to make it work. everything does double duty. it is not just a staircase, but a storage space. it is not just an entry by the
console table, but the kitchen counter. >> as far as this idea of doing double duty, so to speak, what about the cost of something like this? ideas don't necessarily cost something, but implementation might be expensive. >> absolutely. one of the things that happens in a space like this, because we are so program intensive and we used every note and cranny in the space, so there's not a lot of wasted space. when you use every bit of space, that is where the cost comes in. on a square foot basis, this is actually high cost. but on the other hand, it is a tailored living environment that
is perfect for this climate. -- this client. and we get people all the time asking if it is for sale, even when we tell them what it costs. >> are you able to use some of the space saving ideas, or maybe license or reproduce them on a larger scale for other installation? >> throughout the country, micro corp. -- micro dwelling situations are trending big. we see them in new york, dallas, austin. there is such a demand for small spaces. i really think the less is more dictum is being played out in a major way by singles all across is perfect for this climate. -- this client. and we get people all the time asking if it is for sale, even when we tell them what it costs. >> are you able to use some of the space saving ideas, or maybe the country. 33% of new york households are single person household. 35% in boston. over 45% in washington, d.c. what we are seeing in the housing market is a mismatch between available units and the people who want to live in them. this is why the microsoft project, there is a demonstration -- micro loft project, there is a demonstration going on right now. this is actually an amazing thing that is happening. but actually, new york is behind the trend. this is already in place in seattle, san francisco, and in austin. >> tell me about your is house, your zero project that you've
brought the model of. i wonder if you could describe things like the cost and what it's designed to do. >> the manhattan micro loft came in just under $950 per square foot, which is really high for new york city, but again, it was so space intensive. 425 square feet. the zero house is the concept of another micro dwelling units that are come from -- our company developed. it is about 650 square feet. but it is a freestanding structure that can be entirely off the grid. it is solar powered, collects its own water, and processes its own weight. it is a little less than $450 per square foot, but it is plug and play. you install it and it is ready to go. and that is fully loaded. and if you want to be on the electrical grid, it comes down.
>> what about the manufacture of all of the components that go into this? is that already ramped up and ready to go? >> it is an off the shelf rod art. -- off-the-shelf product. we are really into sustainability and leave that people should do more with less. all of the off-the-shelf products available -- are available on our website. other people can go out and build themselves a zero house, too. what is happening with developers is that these projects are standalone projects, but the development community is hungry for this. we have been talking to two different developers in two different cities to get a format, a microsoft format for multiple to wellington. -- micro loft format for multiple dwellings. what does that look like echo -- looked like? in the zero house, because it
also has the environmental and energy overlay, that is even more efficient. we are talking to other developers about grouping these in getting these together. >> keep us up-to-date on the ongoing projects. we will see them built all around the country. thank you very much. coming up, the growing business of delivering dinner kits. you will find out how hellofresh has made it easy for people to cook at home. ♪ >> remember those television
but a company called hellofresh want to to be a cook at home and the dinner kits are at the heart of the menu. joining me is the chief goldman. seth and the cofounder hamish shepperd. how did you come up with the idea? >> we are here to help people looking for a way to make life easier and healthier and tastier. you go to the website each week, hellofresh.com, and you choose what you want and we deliver it to your door and that contains everything with premade fresh ingredients, along with a beautiful recipe card so you can cook it in four to six steps. we are all about helping people cook delicious, healthy meals in an easy way, which is a challenge for many people in today's busy world.
we are excited to be growing across america as we speak. >> let's talk about this expansion, because that is the head of the u.s. division. where can hello first be frowned -- be found and what are your plans? >> right now, 37 states and washington, d.c. we just extended to seven new states, including texas. we had our first texas delivery arriving today. we are very excited about that. and we have plans to cover the rest of the country. >> what is the cost -- what does the cost to bring it home yet the >> it's about $11 per person per meal. >> is it a subscription service? >> you get three dinners and you pick your favorite ones. >> tell us about some new funding you've received. >> we are announcing we have raised $50 million.
we are based in europe as well, and the u.s., and this will help us expand. we can now deliver to 75% of the population of the u.s. we want to make that 100%. now globally, we can deliver to almost half a billion people, which is terribly exciting. >> what about the cost, the margin to you? it must take a lot of infrastructure to get all of these goods out. >> actually, the exciting part of the business is we are curating. we have chefs pining the best ingredient -- finding the best ingredients each week am a so we have very little waste. you will choose your meals each week and we can go out and find the freshest produce possible and change the way people shop. >> thank you very much. you're making everyone hungry. thanks for "taking stock." i'm pimm fox. good night. ♪